Wednesday, October 22, 2008

The Growing Frustration of eBay Sellers

The Growing Frustration of eBay Sellers

When Julie Rodarte and her husband started selling on eBay (EBAY) six years ago, they stored their meager inventory in the family garage. As sales grew, and Rodarte carved out a niche in party and wedding favors, the operation expanded and she created JDR Supply. Now, the Bakersfield, Calif., company leases a 2,000-square-foot warehouse and has three employees. Rodarte, a mother of two with a third child due any day, says her 2008 sales revenue has averaged $23,000 a month, providing her with profits to invest in operations and a salary of about $25,000 annually.

"It's not a lot, but combined with the salary from my husband's job it allows us to do fun things like take vacations, while I'm working from home to be with my kids," Rodarte says.

Although the company sells fancy favors to customers all over the world and holds eBay's "power seller" designation, Rodarte's success didn't seem to matter last month when eBay restricted her account based on a new ratings feedback policy that has angered and alienated small sellers on the site. She found herself still able to purchase items through eBay but not able to sell—effectively shutting down her business with little recourse. "I've always done a good job with customer service and my overall feedback rating had always been 98% and above," Rodarte says, echoing complaints by many eBay entrepreneurs.

eBay's Backbone

They say the new ratings policies, which were announced in January 2008 but didn't fully take effect until May 2008, are unfairly aimed at driving away the small sellers who have been the company's backbone since its founding in 1995 as an online auction site. At Web sites like "eBay Exodus" and "ihateebay," disgruntled eBay entrepreneurs complain about management policies, swap horror stories, and post manifestos about the "psychological tactics employed by the powers that be" at the corporation based in San Jose.

In a nutshell, eBay wants its sellers to keep a 4.3 or above (out of 5-star) composite average on several metrics on which customers leave feedback. The most controversial is the shipping and handling feedback. A 4 in this metric means "reasonable," but if a seller starts getting mostly 4s, eventually that will pull her overall rating down below 4.3. If a buyer rates the shipping charges as "neutral" (3) or "unreasonable" (2)—even if that perception is mistaken—the seller's ratings will plummet and her account can be suspended. Sellers do have 30 days to increase their rating while they're suspended, but if they're not selling, it's obviously tough to get better feedback.

EBay did not respond to requests for comment submitted last week at its Web site and via voicemail. But it has long championed its small business owners at entrepreneurial conferences and training sessions for sellers. In 2006 former eBay CEO Meg Whitman gave a speech at the eBay Developers Conference, saying 1.3 million people made their living selling full-time on eBay. This year the company co-sponsored the 2008 National Small Business Summit held in Washington.

And not all of its power sellers are unhappy with the new feedback policies. Dallas entrepreneur Ann Wood says her eBay store, Willow-Wear, is on target to break sales records this month. "The end of September and the beginning of October have been amazing—particularly jewelry sales," Wood says. Since buyers are increasingly asking about the weight of her gold jewelry, she speculates that some customers may be buying gold for its perceived investment value.

Boosting Buyer Confidence

Regardless of what is driving interest, Wood says, she's thrilled with her progress and thinks the feedback changes that are being criticized by many are helping to boost buyer confidence.

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